Bay Area Home Sales Grow 9%, Bounce Back From 15-Year Low

Bay Area home buyers have come to terms with higher interest rates as sales rebounded last year from a 15-year low.

Home sales across the nine-county region rose 9 percent last year after a sluggish 2023, when the Bay Area home sales sank to the lowest level since the Great Recession, the San Jose Mercury News reported, citing figures from the California Association of Realtors.

The uptick in sales came despite a rise in interest rates to around 6.5 percent, from the historically low interest rates around 3 percent during the pandemic.

“Buyers realize rates aren’t going to get any lower,” Glen Mitchell, an agent based in Half Moon Bay, told the newspaper. “They just get used to them.”

The jump in Bay Area sales coincided with an increase in prices, which rose 6.6 percent year-over-year.

Home prices rose 3.1 percent to $876,263 in Contra Costa County; 6.1 percent to $1.3 million in Alameda County; 4.3 percent to $1.6 million in San Francisco; 9.3 percent to $1.9 million in Santa Clara; and 6.6 percent to $2.1 million in San Mateo County.

Prices also ticked up in Marin, Napa, Solano and Sonoma counties, according to the Mercury News. The luxury market also remained strong in the Bay Area last year, fueled by a soaring stock market with major gains across the tech sector.

All-cash deals represented one in five home sales — and even higher in upscale ZIP codes. In Atherton’s 94027, it was 65 percent; in Walnut Creek’s 94595, it was 67 percent; and in Berkeley’s 94709, it was 68 percent.

“I do think the worst is behind us,” Jordan Levine, chief economist for the California Association of Realtors, told the Mercury News. “But it’s not going to be a V-shaped recovery.”

Though the number of listings across the core five-county Bay Area ticked up 16 percent from last year, inventory remains significantly lower than pre-pandemic levels, according to Compass.

Agents predict it will remain tight this year because of higher interest rates and a lack of new construction.

“We don’t build enough in California,” Levine said. “The new construction pipeline isn’t being filled up, and therefore the resale pipeline that should’ve happened from units that we would’ve built five or 10 years ago never took place.”

Rates on a 30-year fixed-rate mortgage peaked at 7.22 percent in May, typically the busiest season for home buying in the Bay Area. They now sit just below 7 percent.

— Dana Bartholomew